Rising cost and falling ringgit see Malaysia’s pulling power flounder

Young Nepali men prepare to leave for Malaysia and the Middle East at the Tribhuvan International Airport. Post File Photo

Feb 5, 2016- Once an attractive overseas job destination for many Nepali workers, Malaysia is losing its pulling power due to high cost of getting employed and weak currency.

Recruiting agencies have warned further decline in the number of migrants going to Malaysia after the East Asian country revised the levy on the foreign workers.

As per the new regulation introduced on Monday, an annual levy of RM2,500 will be imposed on the salary of foreigners working in manufacturing, service, security and other organised sectors. Foreigners working in plantations and agriculture will have to pay RM1,500.

Earlier, the Malaysian government was charging up to RM1,850 in levy on migrant workers depending on the nature of their jobs. Malaysia hosts more than 700,000 Nepali migrant workers—the highest among all labour destinations.
Representatives of the Nepal Association of Foreign Employment Agencies (Nafea) said they were exploring markets in the Gulf countries as the new Malaysian levy rule had diminished attraction towards jobs there.

Low income, weak ringgit and higher recruitment cost have seen a steep decline in the number of Nepalis going to Malaysia for jobs this year. The Department of Foreign Employment figures suggest only 35,335 Nepalis obtained work permit for Malaysia in the first six months of the current fiscal year, while a total of 117,686 were issued with the permit in the same period last fiscal.

“We cannot send workers under current circumstances. Nepal government and international rights groups should immediately raise these matters at international level to press Malaysian government to reconsider the decision,” said Kumud Khanal, first vice-chairman of Nafea. He called on the Malaysian government either to ask employers to revise the minimum wage of workers or bear the expenses, saying that it would not make a dent on their pockets.

Recruiting agencies, health and training centres have long been protesting Malaysia’s monopoly over pre-departure training and health check-ups of migrants.

The Malaysian government has made it mandatory for Nepali migrants to conduct health check-up and pre-departure training for workers through selected local agents in Nepal who charge exorbitant fees. Malaysia has also outsourced the visa processing to a local Nepali agent which charges workers almost fivefold more than
previous.

“Influential politicians are minting millions in Nepal by enforcing this new rule bringing Nepali workers to undergo training and health check-ups through their assigned agents in Nepal. This has not only displaced Nepali health and training centres but also promoted open exploitation of poor Nepali migrant workers,” said Bal Bahadur Tamang, former Nafea chair.

Nearly 75 percent of an estimated 700,000 Nepali workers currently working in Malaysia earn just RM900—the minimum wage fixed by the Malaysian government. Deducting the levy and other living expenses, it takes around a year for workers to recuperate the cost. Migrant Nepalis usually pay over Rs 100,000 to go to Malaysia as agents there are not willing to bear visa fee and air ticket envisioned by the free-visa-free-ticket scheme.

Myanmar has stopped sending its citizens to Malaysia for work in protest of increase in the visa processing fee, while other countries including Indonesia have threatened to follow suit.

Experts stress on the need for the labour-sending countries to exert pressure on the Malaysian government to scrap the exploitative policies. Those countries should be ready to stop sending workers if required, according to them.

But Nepal is unlikely to go that far at the moment.

Govinda Mani Bhurtel, spokesperson for the Ministry of Labour and Employment, said that Nepal is not in a position to do more than make a formal request to the Malaysian government to reconsider the rule. “Our mission in Kuala Lumpur has not yet informed us about the change in levy rates. We will take a decision in consultation with other stakeholders,” he said.

Spiralling employment cost

– As per new regulation, an annual levy of RM2,500 will be imposed on the salary of foreigners working in manufacturing, service, security and other organised sectors. Foreigners working in plantations and agriculture will have to pay RM1,500.

– Earlier, the Malaysian government was charging up to RM1,850 in levy on migrant workers.

– According to the Department of Foreign Employment, only 35,335 Nepalis obtained work permit for Malaysia in the first six months of the current fiscal year compared to 117,686 in the same period last year.